What Is Unemployment Insurance Fraud?

Unemployment Insurance Fraud is collecting benefits based on false information. If you knowingly collect unemployment insurance benefits even if you are ineligible, then you might be committing UI fraud.

Some of the examples of UI claimants’ fraud are

continuing to collect UI benefits even if you already return to work;
collecting more benefits by not disclosing your part-time job and earnings to the state;
failing to disclose temporary work and earnings when filing weekly claims;
giving false or incomplete information to the state UI agency; and
so on.

Since there has been a spike in UI fraud lately, the U.S. Department of Labor aims to combat it by providing more funding to support the states.

That being the case, we would further delve and discuss UI, whether you are eligible for it or not, the sanctions for UI fraud, and other information you should know.

Table of Contents

What is Unemployment Insurance?

It is an insurance program that provides cash benefits to eligible workers. The Unemployment Insurance program operates in the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands. All states follow the same guidelines established by the federal government and the Department of Labor, but each state administers the unemployment insurance program on its own.

These benefits are meant to be paid for a maximum of 26 weeks in most states, and the amount is generally based on your percentage earnings over the past 52-week period – up to a State maximum amount.

The federal government will provide you with unemployment benefits if you become unemployed without your own fault and you meet the other eligibility requirements.

What Are the Guidelines For Eligibility?

Each state has its own set of guidelines for eligibility, however, according to the federal government, you usually qualify if you are any of the following

Unemployed without your own fault (in most states, this means unemployment due to lack of available work)
Have worked in the past 12 to 18 months and earned minimum wage (the minimum amount as set by each state)
Laid off or unable to work because of the coronavirus measures

To assess whether you truly qualify for the Unemployment Insurance benefits, you should contact your UI state agency or you can check out this website to find more details about your own state’s program.

However, it is worth noting that because of the coronavirus, there have been some changes and provisions in the way UI is administered.

Can You Get Denied of Benefits?

Yes, each state makes its own decisions on whether you qualify for benefits or not. Some of the common reasons why others are denied of benefits are:

Voluntarily leaving work without good cause
Getting fired for misconduct
Unwillingness and inability to accept jobs
Not actively looking for work
Refusing suitable job offers
Making false statements to obtain benefits

How Can You Stay Eligible?

Generally, states would require to do these several things in order to maintain weekly eligibility

File, by mail or phone, weekly or biweekly claims
Actively seek and be available for work each week you claim your benefits
Report any earnings you had within the week, can be from part-time, temporary work, and so on
Go to your local UI claims office or American Job Center
Register with the State Employment Service to help you find work
Report any job offers or job offers you decline within the week

Apart from the list of things cited above, some states have other eligibility requirements that you still need to follow. With that in mind, it would be best to update yourself with the information from your state’s labor office.

Do You Need to Actively Search for Work to Stay Eligible?

Due to the coronavirus, states were given the flexibility to determine whether you are actively seeking work. For example, states like California will not require you to look for work each week in order to be eligible for benefits. With that, it is best to check how your state has adapted and adjusted to the pandemic.

Should the coronavirus be nonexistent or you managed to ride out this pandemic, then you would need to actively seek and be available to work every week in order to claim your UI benefits. Thankfully, there are government services free of charge that can help you in your job search. You can visit your local American Job Center so that they can further assist you.

What Would Happen if You Falsely Claim Benefits?

Anyone who collects Unemployment Insurance benefits is legally responsible to follow all the guidelines and requirements set by their state and the federal government.

That being the case, you can be found guilty of committing UI fraud if you knowingly break the rules and do not follow the protocols. Some of the penalties for UI fraud include

Criminal prosecution (misdemeanor or felony)
Penalties and fines (not less than 15% of the amount of fraudulent payment)
Forfeiture of future income tax refunds
Permanent ineligibility to acquire unemployment benefits
Penalties for fraudulent overpayments

In some states, receiving as little as one week of extra benefits that you did not qualify for already constitutes as fraud.

So with that in mind, you should make sure that you properly file and report to your states’ office. If the state found out that you are receiving unemployment benefits while working, then you might face some of the penalties we have cited above.

What Should You Do if You Mistakenly Received Benefits or Alerts From the Unemployment Insurance Agency?

According to the FBI, there has been a spike in fraudulent UI claims filed using stolen identities lately. That being said, fraudulent funds may have been transferred under your name without you even knowing it.

Should you receive an unauthorized UI claims notification, you should

Report to your employers’ Human Resource department
Immediately inform your bank of the unauthorized transactions
Contact the major credit bureaus (Equifax, Experian, and TransUnion) to update your credit records
Notify the Internal Revenue Service
Report to the Federal Trade Commission using the identitytheft.gov website

Since many victims of identity theft are unaware that their names are being used for fraudulent claims, you must always be on the lookout for any suspicious activities. You can do this by securing your account, monitoring your credit report, bank accounts, and so on.

Fortunately, you will not lose your benefits if you ever fell victim to this scam; however, it might cause delays when you claim your benefits.

Fraudulent claims like identity theft are just one of the many contributing factors that cause delays and backlogs at the state’s unemployment office.

Would it be Possible to Just Repay the Overpayments you Received?

If you have been overpaid and received benefits when you are ineligible, you can make full repayments to your state’s labor office.

However, it is not that easy, and repayment is not always the only option.

Each state has its own penalties and guidelines in order to be able to make full repayment. Some states may allow you to repay the benefits you received or even have them waived, while others may criminally charge or prosecute you for fraud.

For example, in the District of Columbia, anyone who was overpaid is required to make full repayment. Along with the 15% federally imposed penalty, you must pay the actual amount of the overpayment you received. Failure to pay the imposed penalty can result in a referral for prosecution.

In a state like California, on other hand, overpayments can be considered as fraud. You can receive a penalty equal to 30 % of the overpayment amount or even be disqualified for benefits for 5 to 23 weeks.

That is why you should be aware and informed of your own state guidelines in order to prevent receiving harsh penalties.

Do You Need to Hire an Attorney?

If you are being investigated for unemployment benefits fraud, it would be best to have an attorney with you to guide you along the process. UI fraud can lead to hefty fines and harsher penalties that might damage your reputation and employability.

Since there has been an unprecedented number of UI fraud over the past few years, the state and the federal government have been cracking down and imposing stricter penalties for UI fraud. Last June 2020 alone, the state of Arizona and Montana announced that they were expanding their staff to monitor fraudulent activities more effectively.

That being the case, having an attorney with you will help you carefully thread along the guidelines and protocols imposed by the state and federal government.

Book a consultation today and let us protect you!

Can Employers Commit Unemployment Fraud as Well?

Yes, apart from claimants, employers can be charged with UI fraud as well. Since employers are also financially responsible for your UI benefits, they have to follow several guidelines and protocols too.

According to the U.S. Department of Labor, employer fraud is comprised of actions to avoid tax liability or establishing a fictitious account that would enable fraudulent claims.

Some of the examples of employers’ UI fraud are

Reporting that the employee was fired even if he/she is laid off
Providing false information about the employees’ wage, hours, or any information that would result in an overpayment
Withholding unemployment insurance deductions from employees’ checks
Not paying the corresponding contributions to the Employment Development Department

Can You Report Unemployment Insurance Fraud?

Yes, you can report a UI fraud. Generally, you can either call your state fraud hotline or file an online report.

However, it is worth mentioning that each state has different reporting instructions for UI fraud.

For example, in states like Alaska, you just need to call or email the UI investigators; while states like Alabama would require you to file a report online, answer and fax an information sheet, call compensation fraud hotlines, and many more.

Thankfully, the U.S. Department of Labor has compiled a list of hotlines and guidelines for different states. You can know more about your state reporting guidelines here.

How is Unemployment Fraud Detected?

Each state has its own detection methods to identify claimants who commit Unemployment Insurance fraud. Apart from public tips, other information sources for potential UI fraud are

cross-matching of available data;
reports from employers;
Quality Control Audits;
data analytics that helps spots errors and flag irregularities;
claim Center Referrals;
and so on.

So if you think you might have committed even the slightest UI fraud, it would be best to get advice from an experienced attorney in order to remedy the situation. An experienced attorney would in turn help you lower the fines or punishment if you think you unintentionally committed UI fraud.

Is Unemployment Fraud Prevalent?

As the pandemic persists and continues to shake the US economy, Unemployment Insurance fraud has also been increasing. Most of the fraud committed nowadays is engineered by cybercriminals, stealing other people’s identity.

In September 2020 alone, 87 people were arrested by the police in California on charges related to unemployment insurance fraud. Most of them applied for benefits using stolen identity from people who are already dead or currently in prison.

There were also cases of intentional fraud committed even before the pandemic happens. Take for example the case of a nurse from Milwaukee who was found guilty of committing UI fraud. She was collecting $40,000 in benefits annually despite the fact that she has a job that already pays her $70,000 a year.

Consequences of Unemployment Fraud

Unemployment fraud investigations can last from weeks to months. This, in turn, would result in several backlogs in the system, delaying it and making it hard for those who are most in need to receive UI benefits.

To recap here is what we covered:

With that in mind, it is worth pointing out that you can avoid committing unemployment insurance fraud. You just need to strive to always follow the protocols and guidelines set by the state and federal government in order to avoid pressure and stress in the system.

Contact Khouri Law today!